Synplicity, Inc. (Nasdaq:SYNP): Highlights: -- Quarterly revenue
grew year over year as FPGA revenue growth overcame expected ASIC
reductions -- GAAP operating income as a percentage of revenue
increased from 5% to 6%, while non-GAAP operating income increased
from 6% to 13% in the quarters ended June 30, 2005 and 2006,
respectively -- Extended OEM agreement with the Actel Corporation
resulting in the largest contract in company history Synplicity,
Inc. (Nasdaq:SYNP), a leading supplier of software for the design
and verification of semiconductors, today announced financial
results for the quarter ended June 30, 2006. Revenue for the
quarter ended June 30, 2006 was $15.4 million, compared with $15.2
million for the quarter ended June 30, 2005. On a generally
accepted accounting principles (GAAP) basis, net income was $1.1
million, or $0.04 per diluted share, for the quarter ended June 30,
2006, as compared to GAAP net income of $921,000, or $0.03 per
diluted share, for the quarter ended June 30, 2005. For the quarter
ended June 30, 2006, GAAP net income included $222,000 in
amortization of intangible assets from acquisitions and $935,000 in
stock-based compensation expense, resulting from implementation of
FAS123R as of January 1, 2006. For the quarter ended June 30, 2005,
GAAP net income included $222,000 in amortization of intangible
assets from acquisitions and $6,000 in stock-based compensation
expense. Non-GAAP net income was $2.3 million, or $0.08 per diluted
share, for the quarter ended June 30, 2006, compared to non-GAAP
net income of $1.1 million, or $0.04 per diluted share, for the
quarter ended June 30, 2005. A reconciliation of GAAP to non-GAAP
net income is included with this press release. For the six months
ended June 30, 2006, revenue was $29.9 million compared to revenue
of $29.7 million for the six months ended June 30, 2005. For the
six months ended June 30, 2006, the Company reported a GAAP net
loss of $(63,000), or $(0.00) per diluted share. Included in the
GAAP net loss for the six month period ended June 30, 2006 were
stock-based compensation charges of $1.9 million, amortization of
intangible charges of $445,000, and from the first quarter of 2006,
a restructuring charge of $854,000. Non-GAAP net income was $3.1
million, or $0.11 per diluted share, for the six months ended June
30, 2006. GAAP net income of $1.4 million, or $0.05 per diluted
share was previously reported for the six months ended June 30,
2005. This included $445,000 of amortization of intangibles and
$15,000 of stock-based compensation. Non-GAAP net income was $1.9
million, or $0.07 per diluted share, for the six months ended June
30, 2005. "During the second quarter, we re-focused the company
onto our core FPGA implementation strength and delivered solid
execution to our plan, resulting in revenue and earnings growth
despite our exit from the ASIC business," said Gary Meyers,
president and CEO of Synplicity. "Orders in our focused growth
areas of Synplify Premier, Certify, and Synplify DSP exceeded our
expectations and continued to demonstrate our leadership. With
spending under control and an exciting roadmap of unique high value
solutions in hand, we look forward to building greater shareholder
value in the future," concluded Meyers. Business Outlook The
following statements are based on current expectations. We do not
intend to update, confirm or change this guidance until our
earnings conference call for the third quarter of 2006. Our view on
2006 is unchanged from prior guidance. -- Revenue for 2006 is
expected to be in the range of $63.0 to $65.0 million. -- GAAP net
income per fully diluted share for 2006 is expected to be in the
range of $0.10 to $0.15. GAAP net income is expected to include
charges of approximately $3.8 million relating to stock
compensation expense, $890,000 of amortization of intangible assets
and $854,000 of a restructuring charge relating to severance and
the impairment of capitalized software development costs. Tax
expense for 2006 is expected to be about 26.5 percent of pretax
income. -- Non-GAAP net income per share for 2006, which excludes
stock based compensation, amortization of intangible assets and the
restructuring charge mentioned above is expected to be in the range
of $0.28 to $0.34, before consideration of the income tax effect of
the excluded items. -- Revenue for the third quarter of 2006 is
expected to be in the range of $16.0 to $16.5 million. -- GAAP net
income per fully diluted share for the third quarter of 2006 is
expected to be in the range of $0.04 to $0.06. GAAP net income for
the quarter is expected to include non-cash charges of
approximately $950,000 relating to stock-based compensation and
$223,000 of amortization of intangible assets. -- Non-GAAP net
income per share for the third quarter of 2006, which excludes
stock based compensation and amortization of intangible assets
mentioned above is expected to be in the range of $0.08 to $0.10,
before consideration of the income tax effect of the excluded
items. Audio Webcast The Company's earnings call will be webcast
today at 2:00 p.m. Pacific, and may be accessed at
http://investor.synplicity.com. The Company will discuss the second
quarter 2006 results. Following completion of the call, a
rebroadcast of the webcast will be available at
http://investor.synplicity.com through September 30, 2006. For
those without access to the Internet, a replay of the call will be
available from 5:00 p.m. Pacific on July 25, 2006 through August 8,
2006. To listen to a replay, call (719) 457-0820, access code
7737457. Use of Non-GAAP Financial Measures This press release
includes financial measures for net income (loss) and net income
(loss) per share that exclude certain non-cash and other charges
and that have not been calculated in accordance with GAAP. These
measures differ from GAAP in that they exclude amortization of
intangible assets from acquisitions and stock-based compensation
and, in addition in 2006, exclude a restructuring charge. The
Company has provided these measurements in addition to GAAP
financial results because it believes they provide a consistent
basis for comparison between quarters that is not influenced by
other activities and therefore are helpful to understanding the
Company's underlying operational results. Further, these non-GAAP
measures are some of the primary measures the Company's management
uses for planning and forecasting. These measures should not be
considered an alternative to GAAP and these non-GAAP measures may
not be comparable to information provided by other companies. About
Synplicity Synplicity(R) Inc. (Nasdaq:SYNP) is a leading supplier
of innovative software solutions that enable the rapid and
effective design of Programmable Logic Devices (FPGAs, PLDs and
CPLDs) and are used in a wide range of communications,
military/aerospace, consumer, semiconductor, computer, and other
electronic systems markets. Synplicity's tools provide outstanding
performance, cost and time-to-market benefits by simplifying,
improving and automating key design planning, logic synthesis,
physical synthesis and verification functions for FPGA, FPGA-based
ASIC prototyping and DSP designers. Synplicity is the number one
supplier of FPGA synthesis solutions and has been rated #1 in
customer satisfaction in 2004 and 2005 in EE Times' Annual FPGA
Customer Survey. Synplicity products support industry-standard
design languages (VHDL and Verilog) and run on popular platforms.
The company operates in over 20 facilities worldwide and is
headquartered in Sunnyvale, California. For more information visit
http://www.synplicity.com. Forward-Looking Statements This press
release contains forward-looking statements including, but not
limited to, statements regarding the Company's growth in revenue,
estimated net income and certain expenses for the remainder of 2006
and our outlook for our product road map. These statements relate
to future events and involve known and unknown risks, uncertainties
and other factors that may cause the Company's actual financial
results, levels of activity, performance or achievements to differ
materially from those expressed or implied by the forward-looking
statements including continued demand for the Company's FPGA
products, the Company's ability to increase revenue from its FPGA
products, the orderly wind down of its ASIC business, employee
retention and the impact of variability in the Company's stock
price on its stock-based compensation expense. In some cases, you
will be able to identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "continue" or the
negative of these terms or other comparable terminology.
Forward-looking statements are only predictions and actual events
or results may differ materially. The Company cannot provide any
assurance that its future results will meet expectations. The
Company's operating results could differ materially due to a number
of factors, including the performance and quality of its software
products relative to its competitors' products, the growth of the
markets addressed, and the Company's level of expenses. For
additional information and considerations regarding the risks faced
by the Company, see its annual report on Form 10-K for the year
ended December 31, 2005 and quarterly report on Form 10-Q for the
three months ended March 31, 2006, as filed with the Securities and
Exchange Commission, as well as other periodic reports filed with
the SEC from time to time. Although the Company believes that the
expectations reflected in the forward-looking statements are
reasonable, the Company cannot guarantee future results, levels of
activity, performance or achievements. In addition, neither the
Company nor any other person assumes responsibility for the
accuracy or completeness of these forward-looking statements. The
Company disclaims any obligation to update information contained in
any forward-looking statement. Synplicity, Certify and Synplify are
registered trademarks of Synplicity, Inc. All other brands or
products are the trademarks or registered trademarks of their
owners. -0- *T SYNPLICITY, INC. CONSOLIDATED BALANCE SHEETS (in
thousands) June 30, December 31, 2006 2005 (1) -----------
----------- (unaudited) Assets: Current assets: Cash, cash
equivalents and short-term investments $59,789 $ 57,099 Accounts
receivable, net 11,495 12,632 Other current assets 1,863 2,372
-------- --------- Total current assets 73,147 72,103 Property and
equipment, net 2,446 2,631 Goodwill 1,272 1,272 Intangible assets,
net 1,514 1,882 Other assets 881 749 -------- --------- Total
assets $79,260 $ 78,637 ======== ========= Liabilities and
Shareholders' Equity: Current liabilities: Accounts payable $ 587 $
944 Accrued liabilities 1,403 1,461 Accrued compensation 3,334
4,031 Deferred revenue 20,339 18,355 -------- --------- Total
current liabilities 25,663 24,791 Shareholders' equity: Common
stock 56,241 58,257 Additional paid-in capital 5,255 3,360
Accumulated deficit (7,493) (7,430) Accumulated other comprehensive
loss (406) (341) -------- --------- Total shareholders' equity
53,597 53,846 -------- --------- Total liabilities and
shareholders' equity $79,260 $ 78,637 ======== =========
---------------- (1) Derived from audited financial statements
SYNPLICITY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share data) (unaudited) Three Months Six
Months Ended Ended June 30, June 30, -----------------
----------------- 2006 2005 2006 2005 -------- -------- --------
-------- Revenue: License $ 7,948 $ 8,377 $15,079 $16,353
Maintenance 7,439 6,806 14,777 13,388 -------- -------- --------
-------- Total revenue 15,387 15,183 29,856 29,741 Cost of revenue:
(2) Cost of license 61 161 176 293 Cost of maintenance 445 462 971
918 Amortization of intangible assets from acquisitions 222 222 445
445 -------- -------- -------- -------- Total cost of revenue 728
845 1,592 1,656 -------- -------- -------- -------- Gross profit
14,659 14,338 28,264 28,085 Operating expenses: (2) Research and
development 5,904 6,151 12,477 12,232 Sales and marketing 6,019
5,781 12,350 11,539 General and administrative 1,862 1,693 3,986
3,224 Restructuring charge - - 854 - -------- -------- --------
-------- Total operating expenses 13,785 13,625 29,667 26,995
-------- -------- -------- -------- Income (loss) from operations
874 713 (1,403) 1,090 Other income, net 699 342 1,317 614 --------
-------- -------- -------- Income (loss) before income taxes 1,573
1,055 (86) 1,704 Income tax provision (benefit) 458 134 (23) 268
-------- -------- -------- -------- Net income (loss) $ 1,115 $ 921
$ (63) $ 1,436 ======== ======== ======== ======== Net income
(loss) per share: Basic net income (loss) per share $ 0.04 $ 0.04 $
(0.00) $ 0.05 ======== ======== ======== ======== Shares used in
basic per share calculation 26,950 26,303 26,983 26,280 ========
======== ======== ======== Diluted net income (loss) per share $
0.04 $ 0.03 $ (0.00) $ 0.05 ======== ======== ======== ========
Shares used in diluted per share calculation 28,139 27,373 26,983
27,608 ======== ======== ======== ======== ---------------- (2)
Amortization of stock-based compensation relates to the following:
Three Months Six Months Ended Ended June 30, June 30, -------------
-------------- 2006 2005 2006 2005 ------ ------ ------- ------ (in
thousands) Cost of maintenance $ 25 $ - $ 48 $ - Research and
development 437 (4) 890 - Sales and marketing 244 5 482 9 General
and administrative 229 5 476 6 ------ ------ ------- ------ Total
stock-based compensation $ 935 $ 6 $1,896 $ 15 ====== ======
======= ====== SYNPLICITY, INC. RECONCILIATION OF GAAP TO NON-GAAP
MEASURES (in thousands, except per share data) (unaudited) Net
Income (Loss) Three Months Six Months Ended Ended June 30, June 30,
----------------- ----------------- 2006 2005 2006 2005 --------
-------- -------- -------- GAAP net income (loss) $ 1,115 $ 921 $
(63) $ 1,436 Amortization of intangible assets from acquisitions
222 222 445 445 Stock-based compensation 935 6 1,896 15
Restructuring charge - - 854 - -------- -------- -------- --------
Non-GAAP net income (3) $ 2,272 $ 1,149 $ 3,132 $ 1,896 ========
======== ======== ======== Non-GAAP net income per share: Non-GAAP
net income per common share $ 0.08 $ 0.04 $ 0.11 $ 0.07 ========
======== ======== ======== Shares used in non-GAAP per share
calculation 28,139 27,373 28,497 27,608 ======== ======== ========
======== ---------------- (3) The non-GAAP calculations of net
income and net income per share for the three and six months ended
June 30, 2006 were not tax-effected. If the non-GAAP computation of
net income was taxed at the rate the Company is projecting for the
full year, the non-GAAP net income would have been $2.0 million, or
$0.07 per share and $2.3 million, or $0.08 per share, respectively,
for the three and six months ended June 30, 2006. Operating Income
(as a percentage of revenue) Three Months Ended June 30,
----------------- 2006 2005 ------- ------- GAAP operating income
6% 5% Amortization of intangible assets from acquisitions 1% 1%
Stock-based compensation 6% 0% ------- ------- Non-GAAP operating
income 13% 6% ======= ======= Forward-Looking Net Income per Share
Three Months Year Ending Ending September 30, December 31, 2006
2006 ------------ ------------ GAAP net income per share
$0.04-$0.06 $0.10-$0.15 Amortization of intangible assets from
acquisitions $ 0.01 $ 0.03 Restructuring charge $ - $ 0.03
Stock-based compensation $ 0.03 $0.12-$0.13 ------------
------------ Non-GAAP net income per share $0.08-$0.10 $0.28-$0.34
============ ============ *T
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